Taking Stock in Ukraine

The political crisis that began last November when then-Ukrainian President Viktor Yanukovych declined to sign an association agreement with the European Union has triggered conflict between Russia and Ukraine and a sharp deterioration in relations between the West and Moscow. Seven points provide key context for understanding what is happening.

First, Ukraine today finds itself in a vulnerable position largely due to bad decisions by its own political leaders. They put off needed economic reforms because they feared the political consequences. And sometimes—Yanukovych being the prime example—they put personal power and greed ahead of the national interest.

Those bad decisions had costs. For example, in 1990, shortly before the USSR collapsed, GDP per capita in the Ukrainian Soviet Socialist Republic and neighboring Poland were roughly equal. If anything, Poland trailed. Today, Poland’s GDP per capita is three times that of Ukraine. Polish leaders made the often-tough decisions; Ukraine’s did not.

Ukraine was and remains one of the most energy-inefficient countries in the world. In 1998, it produced 18–19 billion cubic meters (BCM) of gas per year. At that time, a major international energy company concluded that Ukraine could easily increase domestic production to 30–35 BCM per year—and it gave the Ukrainian government the geological data to show it.

Sixteen years later, Ukraine’s annual gas production is only 20 BCM. The government held down the price for domestically produced gas so that it would have “cheap” gas in order to subsidize heating and energy to households. At that price, no one had an incentive to produce more gas. Many analysts believe Ukraine cannot get through the coming winter without cutting some kind of gas purchase deal with Russia. That question would not have arisen if Ukraine’s leaders had made better decisions years ago and the country were now producing 30 BCM of gas.

Second, the political crisis that began in Ukraine last November was caused and exacerbated by Yanukovych’s mistakes. His decision not to sign the association agreement with the European Union triggered the initial protest demonstrations. His government’s early use of force against the protesters and its efforts to push through a spate of anti-democratic laws fueled the opposition and led to larger protests. To be sure, demonstrators share blame for provoking clashes with police in January. But it was his government’s decision to resort to deadly force on February 19 and 20 that made Yanukovych’s position untenable.

During the night of February 20–21, an agreement was brokered between Yanukovych and the three principal opposition leaders. It provided for power-sharing and moving up the presidential election by a few months. The opposition leaders likely could not have sold that agreement to the protestors, but they had no opportunity to try. Yanukovych signed the agreement, left Kyiv, and promptly disappeared.

The Rada (parliament) on February 22 appointed an Acting President and shortly thereafter approved an acting cabinet. It probably did not check every constitutional box. The Ukrainian constitution made provision for the President’s death or resignation; it gave no guidance in the event the President just walked away.

Third, this has been a Russia-Ukraine crisis since February. The crisis morphed from an internal Ukrainian political dispute into a Russia-vs.-Ukraine confrontation when Vladimir Putin acted out of concern that Yanukovych had left and a pro-European government had taken charge in Kyiv. “Little green men”—as Ukrainians called the heavily armed men in Russian combat fatigues with no identifying insignia—seized Crimea. Putin denied they were Russian soldiers in a March 3 press conference, though he conceded in May that they were indeed his troops.

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Just weeks after Russia had occupied and illegally annexed Crimea, little green men began to seize government buildings in Donetsk and Luhansk in eastern Ukraine. Local pro-Russian separatists took part, but key leadership and instigation came from Russia. For example, the first Prime Minister and Defense Minister of the so-called “Donetsk People’s Republic” had residence addresses in Moscow.

Ukrainian military forces began to push the separatists back in early June. Russia responded by supplying the fighters in the east with armored personnel carriers and other heavy equipment. Ukrainian military forces nevertheless continued to make progress, relying in part on their advantage in artillery (which appears to have been responsible for a number of civilian deaths in the east). By early August, Kyiv saw a chance to defeat the separatists and restore sovereignty over Donetsk and Luhansk.

However, on or about August 23, regular units of the Russian army entered Ukraine and, using massed artillery and rocket strikes, routed Ukrainian forces. Ukrainian units took heavy casualties. Reportedly, hundreds of Russian soldiers died as well. The sides negotiated a ceasefire on September 5.

The Russian goal over the past eight months appears to have been to destabilize Ukraine, in order to make it more difficult for Kyiv to draw closer to the European Union and to address its pressing domestic needs. Several motives would explain this:

• Putin’s vision of Russia as a great power requires a sphere of influence. A Ukraine moving toward Europe leaves a big hole in that.

• Pulling Ukraine back toward Russia plays well with Putin’s domestic constituency. That said, polls show the Russian people do not want the Russian army in Ukraine, which explains the great lengths to which Moscow has gone to hide the fact from the Russian people that Russian soldiers have fought and died in Donetsk and Luhansk.

• Putin fears a successful Ukrainian state. If Ukraine builds a modern democracy with a growing economy integrated into the European Union—a big if, to be sure—it would provide an unwelcome example that an increasingly autocratic Kremlin does not want the Russian people to see.

Fourth, the ceasefire and settlement process are tenuous at best. While the ceasefire resulted in a reduction of fighting, it by no means has stopped it. The Donetsk airport, in particular, has witnessed heavy battle. Key elements of the ceasefire agreement have gone unfulfilled. Kyiv has taken some steps, for example, passing a law on autonomy for Donetsk and Luhansk. Moscow appears to have done little; it has taken no action to secure the Ukraine-Russia border and allow OSCE monitoring.

Kyiv and Moscow may not be able to agree on a settlement. As early as June, President Poroshenko laid out ideas such as decentralization of power, special status for the Russian language, and taking efforts to deepen relations with NATO off the table, which should have been of interest to Moscow. The Russians did not engage on these ideas. They instead appear to be aiming to create a frozen conflict as a means to pressure Kyiv.

Fifth, in addition to the challenge of the conflict in the east, the government in Kyiv has a pressing domestic agenda. Poroshenko and his government need to move on a host of issues: economic reform, an anti-corruption program, decentralization of political authority, and addressing the crucial energy sector.

The government attributes the lack of progress on these questions to its need to focus on the conflict in the east. That is partially understandable, but complaints are already being voiced about the slow movement on economic reform and lack of serious effort to weed out corruption. If the government does not soon tackle these challenges, its popular support will erode. Moreover, the longer it delays needed reforms, the more likely it is that Ukraine will remain an economic basket case.

A second factor that has delayed the reform agenda has been the October 26 parliamentary elections. Poroshenko said that he wanted a new parliament to tackle reforms. He now has it. As a result of Sunday’s elections, parties endorsing pro-reform and pro-European Union policies will hold a strong majority of the seats in the new parliament. Hopefully, they can quickly agree on formation of a stable majority coalition that can work with the President to tackle the domestic agenda as well as the conflict in the east.

Sixth, beyond Ukraine, the West has a broader Russia problem. Putin’s use of force to seize Crimea and destabilize eastern Ukraine has violated a fundamental rule of post-war European security: states should not use military force to take territory from other states.

The Kremlin claims a right to defend ethnic Russians and Russian speakers, regardless of their nationality or location. What does that mean for neighboring states with large ethnic Russian populations, such as Kazakhstan, Estonia, and Latvia, the latter two being NATO members? Putin, moreover, holds an intense antipathy toward NATO. The Alliance should consider about how it might respond if Russia were to challenge NATO, for example, by having little green men seize a government building in Estonia.

Seventh, the United States and the West need a patient, long-term policy response. The crisis will likely simmer for months to come. The West requires a sustainable policy for dealing with it and with Russia. To date, the Western response has had three vectors.

The first is support for Ukraine. The United States and European Union have extended political support to Kyiv, including considerable high-level contact. They worked with the International Monetary Fund to develop a program for Ukraine. One area where the West should do more is greater military assistance, including providing defensive arms.

The second vector has been actions by the United States and other NATO members to bolster NATO’s military presence in Central Europe and the Baltic states. From 1997 until early this year, NATO avoided military deployments on the territory of the states which joined the Alliance in 1999 and thereafter. But Russia’s actions against Ukraine have led NATO countries to deploy air, land and sea forces into and near Central Europe and the Baltics, to reassure nervous allies and reinforce a red line to the Kremlin.

The third vector of Western policy has been economic sanctions on Russia. These sanctions, targeting individuals as well as the financial, energy, and defense sectors of the Russian economy, have had an impact. Capital flight has soared; the ruble has fallen to new lows; economists continually downgrade estimates of Russian GDP performance for this year and for 2015–16; and Russian companies are now turning to their government for tens of billions of dollars in credit financing that they cannot obtain in the West.

This may have induced a degree of caution in Moscow. But the sanctions have not yet achieved their primary goal: to effect a change in Kremlin policy so that Russia becomes part of the solution rather than the core of the problem in eastern Ukraine. (There remains the question of Russia’s illegal occupation of Crimea, but Kyiv and the West appear to have set that issue aside for now, to be addressed in the longer term.)

The theory behind the sanctions is that economic pain may cause Putin to rethink his policy. This is not a sure thing; some analysts believe he will instead use the sanctions to rally the Russian people against the West. Even if the West has doubts about whether the sanctions will achieve their desired political goal, however, it is important that there be some punishment for Russia’s egregious use of military force. Otherwise, the Kremlin might decide to use such tactics elsewhere.

The Russia-Ukraine crisis will be with us for some time to come. It is critical that the West have a sustainable policy to support Ukraine and push back against Russia’s aggression. The West should leave the door open for diplomatic engagement if Moscow changes its course. Unfortunately, however, signs of a course correction are not yet evident.

It is too soon to tell whether Pompeo would take a different approach toward Turkey...Though I wouldn’t expect the direction of U.S. policy to change significantly...The working groups put in place after Tillerson’s Ankara meetings were something that multiple other secretaries of state had used in the past to address tough policy issues, and there [is] no reason why this particular group could not continue under the new leadership...[Moreover], U.S. policy on the issues of Brunson and Gülen will not change.